presentation : sa smme conference thursday, 26 october 2006 birchwood hotel benoni
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PRESENTATION : SA SMME CONFERENCE
THURSDAY, 26 OCTOBER 2006
BIRCHWOOD HOTEL
BENONI
National & Provincial Priorities
National Goal:• Halving poverty and unemployment by 2014
Provincial Priorities:• Enabling faster economic growth and job creation• Fighting poverty & building strong, sustainable
communities• Developing healthy, skilled and productive people
Fundamental Assumptions
• Entrepreneurs create and build the future• They can be found in every walk of life• A few entrepreneurs can make a difference; but when
there are many, a region or community simply takes off• Most have become entrepreneurs in spite of the system
and not because of it
Defining the Entrepreneur
• Joseph Schumpeter (1934) describes entrepreneurs as “responsible for the change of the economy using new technologies or upgrading an old one”.
• Peter Drucker (1979), enlarge the definition and focus it on opportunity. Endeavor is not just about creating a enterprise, but doing it allied to a real opportunity.
• Louis Jacques Filion (1986), define entrepreneurs as being the kind of people that conceive, develop and realize visions.
Market Challenge
1. Why do people not start businesses?
What are the barriers?
• Fear of taking risk• Educational limitations• Apartheid legacy• Cultural elements
Market Challenge
2. Why do businesses fail?• Access to capital • Under capitalisation• Poor management• Poor record keeping• Access to markets• Over estimation of market• Quality of people
Market Challenge
3. How do we foster improvement?(grease the wheels of enterprise)
• Info and advice• Mentorship• Training• Facilitation• Incentives• Finance• Affirmative procurement
ASGI-SA Key Constraints
• Barriers to entry & competition in sectors of the economy• Regulatory environment and burden on SMMEs
Addressed through:• Encouraging establishment, growth & sustainability of
SMMEs• Procurement quotas for SMMEs• Making finance & other opportunities accessible to
SMMEs
ENTREPRENEURS
ENTREPRENEURSWHO HAVE
TO BE PUSHED
ENTREPRENEURS WHO RESPOND TO SUPPORT AND HELP
ENTREPRENEURS WHO JUST
“GET ON WITH IT
THE ENTREPRENEUR AXIS---------------------------------------------------------------------------------------------------------------ENTREPRENEURIAL STRONG ONTALENT LIES BURIED ENTREPRENEUR
TEMPERAMENTCHARACTER THEMES
THE SUPPORT INFRASTRUCTURE
PEOPLE IDEAS
SECTOR Education and TrainingResearch and Development Property Finance
Business Support
Community Development
FACILITY School; Industry;Business incubator;
Seed and venture
Sub-contractors Housing;
College; university; innovation centre capital labour pool Schools;Unversity; and garage science, Hospitals;
Training facility; technology Recreation;Entrepreneur School and business Transport;
parks Telecoms
ACTIVITYCourses and Programmes
Technology transfer
Premises and Support Equity
Training; advise and networking
Amenity provision
EXISTING ENTERPRISES
Reasons for Business Failure
Poor
Management
of Financial
Activities 34%
Labour
Problems 6%
Staffi ng
Problems 9%Sales &
Marketing
Problems 11%
Poor
Bookkeeping
& Records
12%
Inflation &
Economic
Conditions
12%
Lack of
Management
Competence
16%
Non-Financial Support Interventions
• Financial Management Support– Accounting/bookkeeping– Setting up a debtors/creditors system– Setting up a stock control system
• Technical Support– Assistance with IT hardware and software– Product testing & development– Feasibility Stidies– ISO Accreditation– Factory Layout
• HRD Support– Assistance with setting up HR policy & systems– Setting up a payroll system
Non-Financial Support Interventions
• Operational Support– Business administration– Mentorship & coaching– Assistance improving turnover
• Planning Support– Business Plan– Productivity Improvement Plan
– Business Turnaround Plan
• Legal Support– Joint venture agreements– Purchase agreements
Financial Support
To provide financial support to SMMEs efficiently and timeously including but not limited to the following:-
- Guarantees
- Bridging Finance
- Debtors Factoring
- Re-Financing
- To facilitate access to capital from financial institutions and other institutions such as Khula, NEF, Umsobomvu etc.
- Incentive
General Finance Programme
Pilot (R50 000 – R2 000 000)
To provide both long and short term debt finance for the following:
- Start-ups
- Expansions
- Acquisition of assets
- Working capital
Leverage Programmes
TO FORM STRATEGIC PARTNERSHIPS
- Joint Funds with major banks
- Guarantee Schemes
INVESTMENT CRITERIA
GEP GENERAL FUND GEP GUARANTEE/ JOINT FUND
Ownership SA Citizen SA Citizen
Business location Gauteng Gauteng
Finance Required
- Minimum- Maximum
R 50, 000
R 2, 000, 000
R 20 000
R 1, 000, 000
Industry Focus All sectors (preference will be given to industry targeted through GDS Strategy
Tenders/ Contracts
Minimum Requirements -Business Plan-Projected Financial Statements-Economic viability-Entrepreneurial involvement-Black Owned/Managed-Demonstrate commitment
Criteria to be determined by concerned parties
Funding Questions
Question Answer
What is the money needed for? The answer yields the loan amount needed.
Is it a short term or long-term need?
The answer determines the length of the loan.
What will you give up for the capital?
The answer determines what sort of requirements the owner must adhere to in order to get the money.
What rate of return can be expected from the success of the business?
The answer indicates how much interest on a loan or return on investment a business can afford to pay.
FUNDS
TIME
Gestation
Prototype
Roll-outInception
Growth
Expansion
Maturity
Fixed Expenses
Variable ExpensesStartup
Collateral
Debt
FoundersAngel InvestorsVenture CapitalGovernment Agencies
Equity
Breakeven
Business Plan which addresses:1. Technical Risk2. Market Risk3. Growth Risk4. Financial Risk5. Management RiskSkills Development Business Services
Business Development Life Cycle
Vision• Africa’s leading enterprise development and business support
agency.
Mission• To enable entrepreneurs.
Values• Professional• Accountable• Focused• Accessible
Vision, Mission & Values
To facilitate increased SMME participation in mainstream economy and
their contribution to economic growth, development and employment in Gauteng
Our Goal
Provide efficient and timely financial support to develop SMME’s
Provide efficient and timely business development support to SMME’s to increase professionalism of SMME’s
Contribute to the creation of an enabling environment for SMME growth and sustainability
Identify business opportunities, enhance business facilitation and business partnerships
Facilitate increased SMME participation, including women, youth and people with disabilities in the province’s growth sectors, and GPG’s priority socio-economic development projects
Ensure efficient and effective management of GEP
Our Strategic Priorities
Thank you
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